E-commerce.
...al book store.” (PR Newswire, June 10, 1997). The name Amazon.com also has an extension “.com” which shows that it is an internet –based company and also distinguishes itself from its competitors namely VG Jones and Barnes and Noble. The designing of a company website also has a major influence on its market. Amazon.com took a lot of new actions to promote its website. For example, they said (Rindova and Kotha, 1999) “we want customers who enter Amazon.com to indicate whether they want to be visible or invisible. If they choose visible, then when they’re in the science fiction section, other people will know they’re there. People can ask for recommendations –read any good books lately?-or recommend books to others.”(Quoted in fast company, 1996). This makes the customers to utilise their visit to a full extent. Advertising is one of the important strategies that should be given more importance when it comes to e-business. The Amazon also has its own advertising policies. The Amazon relies heavily on traditional advertising as a brand-building tool. For example, a lot of advertisements of the Amazon refer to the largest buildings in the world to represent the size of its virtual book collection. The company also organizes various contests and also has online writings of award winning authors to attract more people towards it. A high level of advertising expenditure of any company shows it’s desire to maintain its quality and to maintain its leadership. According to statistics the Amazon.com invests more than 23% of its revenues in advertising. The companies carry out a variety of actions to maintain their leadership in the market. Some of the common things that the companies do are change their motto and cut down their prices. For instance, when Amazon came to know that Barnes and Noble is compete ting with it in the market, it announced deeper price discounts and expanded its selection of books. This shows that the company is very quick to adapt to the growing competition. A company which doesn’t make quick changes with respect to the changing business environment will not be able to compete with the other company’s and will soon face serious consequences. The Amazon.com changed its strategy, when it recognized that the internet technology has shifted the bargain power towards the customers and hence it redesigned its strategy focussing only on the customers. According to Bezos (ref) “customer service is a critical success factor for online merchants. If you make customers unhappy in the physical world, they might each tell a few friends. If you make customers unhappy on the internet, they can each tell thousands of friends with one message to a news group. If you make them really happy, they can tell thousands of people about that.” Hence a company should concentrate more on making the customers comfortable, otherwise it is very difficult to generate traffic to the company. The Amazon takes a lot of interest in maintaining a good one to one relationship with its customers. The business models followed by the company contribute a lot for its competitive toughness and the benefit of the customers. Source (Building Reputation on the internet, Rindova and Kotha, 1999) The next part of this section deals with the business models that are followed by Amazon.com. According to Michael Rappa (ref) “A business model is the method of doing business by which a company can sustain itself –that is, generate revenue. The business model spells –out how a company makes money by specifying where it is positioned in the value chain.” All company’s aim in generating more profit, hence they give a lot of importance in choosing their business models. Some of the basic business models are brokerage, advertising, infomediary, merchant, manufacturer, affiliate, community, subscription, utility etc. These models are implemented in different ways. The firms may combine several business models as a part of its internet strategy. The models used by Amazon are the Brokerage model, Merchant model and affiliate model. Brokerage model is one which brings the buyers and sellers together and assists transactions. The brokerage model includes market place exchange, buy/sell fulfilment, demand collection system, auction broker, transaction broker, distributor, search agent and the virtual market place. The amazon.com falls under the virtual market place as it is a virtual mall, a hosting service for online merchants that changes setup, monthly listing, and /or transaction fees. They may also provide automated transactions and marketing services. The Amazon also follows the merchant model. Hence it is also called as a e-tailer, that is a retail merchant which operates exclusively over the web. The affiliate model is one which provides purchase opportunities to people no matter wherever they are surfing, this done by having a number of partner sites. The Amazon uses this model and makes its customers access the partner sites through them. This not only increases the popularity of the company but also generates revenue. Source ( Managing the digital enterprise, Rappa ,web) Barnes & noble This part of the report analyses the Barnes and nobles market and the reasons for the fall of its market during the mid 90’s. The company was started in 1995 as an online division of Barnes and noble, the leader of traditional book retailing in the US. The online division was basically started as a book retailer on AOL in response to Amazons growing online success. The company however couldn’t handle the competition of Amazon in the beginning, as Amazon took precautionary steps fearing the threat of Barnes & noble as a competitor. The strategies and the business models of Amazon were designed in such a way that it attracted more crowds. The Barnes and noble were traditional book retailers and they didn’t want to invest more on the advertisements, while Amazon were eyeing for a long term profit. This led to the decrease in popularity of Barnes and noble. Also Barnes and noble were not multi channelled as the Amazon, they concentrated on only books. The Amazon took advantage of these factors and started to lead the competition in the market. This made the market of Barnes and noble to fall down. When the markets of the Barnes and noble went down, they started to work on the factors that other competitors took advantage and came out with the solution for it by changing their strategies and designs. They added new features to their websites like related links, important services, purchase of gifts, toys etc. They also started to concentrate more on advertisements and on affiliate concept. Thereby it started to have partner sites and generate more revenue. The company also started to realise that the one to one relationship is important to make the customers happy and hence started to redesign its strategies according to it. These led to the company’s come back after its fall. The business models followed by Barnes & noble are the affiliate model and the click and mortar model. Any company which has a physical store presence and an online presence follows the click and mortar model. Suggestions to VG Jones VG Jones being a leading multi channel retailer holding shares in books, video/DVD and music market has been experiencing a pre- tax loss of over £ 130 million as its sales dropped by 2 % in 700 stores. Analysts claim that the reason for this is because of the competition set by the online retailers like Amazon. These competitors pose a great threat as they either provide a wide range of products or at a low cost. The analysis of the markets of Amazon and Barnes & noble, shows that these companies change their market strategies with time and competition. Barnes and noble also faced some downfall in its market, but managed to get on track because of their quick reaction to the situation. In this case also the company should revise their strategies and design to revive from the situation. VG Jones should concentrate more on ...